In recent months ominous ads about prescription drugs have flooded the TV airwaves. Perhaps by design, it’s not always clear who’s sponsoring the ads or why.
Or, for that matter, why now?
The short answer is that Congress is paying attention. House and Senate members from both parties have launched at least nine bills, parts of which may be packaged together this fall, that take aim at pharmacy benefit managers, companies that channel prescription drugs to patients. Here’s a primer to help you decipher what’s happening.
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What are pharmacy benefit managers? Known as PBMs, these companies were created in the 1960s to help employers and insurers select and purchase medications for their health plans. The industry mushroomed as prescription drug spending grew about 200-fold between 1967 and 2021. In addition to negotiating discounts with manufacturers, the PBMs set payment terms for the pharmacies that buy and dispense the drugs to patients. In effect, they are the dominant middlemen among drugmakers, drugstores, insurers, employers, and patients.
How big is the PBM industry? There are around 70 PBMs in the U.S. Through mergers, three of them — CVS Caremark, Optum Rx, and Express Scripts — have come to control 80% of the prescription drug market, and each brings in tens of billions of dollars in revenue annually. The PBMs control the drug pipeline from manufacturers to the pharmacy counter.Their buying power allows them to obtain discounted drugs for health plans while setting prices and terms for sales at drugstores. The big three are part of massive conglomerates with important stakes in almost every sector of he …
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In recent months ominous ads about prescription drugs have flooded the TV airwaves. Perhaps by design, it’s not always clear who’s sponsoring the ads or why.
Or, for that matter, why now?
The short answer is that Congress is paying attention. House and Senate members from both parties have launched at least nine bills, parts of which may be packaged together this fall, that take aim at pharmacy benefit managers, companies that channel prescription drugs to patients. Here’s a primer to help you decipher what’s happening.
Email Sign-Up
Subscribe to KFF Health News’ free Morning Briefing.
What are pharmacy benefit managers? Known as PBMs, these companies were created in the 1960s to help employers and insurers select and purchase medications for their health plans. The industry mushroomed as prescription drug spending grew about 200-fold between 1967 and 2021. In addition to negotiating discounts with manufacturers, the PBMs set payment terms for the pharmacies that buy and dispense the drugs to patients. In effect, they are the dominant middlemen among drugmakers, drugstores, insurers, employers, and patients.
How big is the PBM industry? There are around 70 PBMs in the U.S. Through mergers, three of them — CVS Caremark, Optum Rx, and Express Scripts — have come to control 80% of the prescription drug market, and each brings in tens of billions of dollars in revenue annually. The PBMs control the drug pipeline from manufacturers to the pharmacy counter.Their buying power allows them to obtain discounted drugs for health plans while setting prices and terms for sales at drugstores. The big three are part of massive conglomerates with important stakes in almost every sector of he …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]